Looking for an experienced lender for bank statement or DSCR loan
Rental Property Investor · Scottsdale · Member since 2021 · 9 posts · 3 votes
Looking for an experienced lender for bank statement or DSCR loan
Most Popular Reply
Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votesQuote from @Jimmy Sont:
I'm currently looking for a lender that is experienced with bank statement loans or DSCR loans in AZ. My current broker has spent 2 months trying to find me a good lender but not much luck. The first lender was slow at responding and the second lender wanted an extra 10% down for a total of 30% down for using AirDNA data and for the appraisal showing a "declining" market. Thanks in advance
Hey Jimmy,
There is a few ways to approach the rental income. If you are using the actual short term rents, lenders will require 12 months of statements showing proof of short term rental income. The minimum downpayment on a DSCR loan is 20% down if you have experience, but most lenders are at 25% down.
Since its in a declining market, there may be an LTV OR rate adjustment for this, without compensating factors. If you have compensating factors such as reserves, FICO, DSCR ratio, and etc.. you may be able to get an exception.
LuxePrivate Investments LLC 572 Reviews
9 Replies
- 2yBryan MartinezBusiness MemberLender · Austin, TX · Member since 2019 · 22 posts · 6 votes
Hey Jimmy, Visio Lending is a good option for STR's in AZ. I worked there for about 5 years previously. If you haven't spoken with anyone there before I can send you my buddy's number who is still there.
- 2yDerek BrickleyBusiness MemberLender · Ann Arbor, MI · Member since 2021 · 665 posts · 227 votes
Hey Jimmy,
Not sure exactly the situation, but do you already have the appraisal back? Short term rental DSCR 20% down is common, but would be curious what came back in the market data
Gold Star Mortgage Financial Group548 Reviews - 2yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Jimmy Sont:
I'm currently looking for a lender that is experienced with bank statement loans or DSCR loans in AZ. My current broker has spent 2 months trying to find me a good lender but not much luck. The first lender was slow at responding and the second lender wanted an extra 10% down for a total of 30% down for using AirDNA data and for the appraisal showing a "declining" market. Thanks in advance
Hey Jimmy,
There is a few ways to approach the rental income. If you are using the actual short term rents, lenders will require 12 months of statements showing proof of short term rental income. The minimum downpayment on a DSCR loan is 20% down if you have experience, but most lenders are at 25% down.
Since its in a declining market, there may be an LTV OR rate adjustment for this, without compensating factors. If you have compensating factors such as reserves, FICO, DSCR ratio, and etc.. you may be able to get an exception.
LuxePrivate Investments LLC 572 Reviews - 2yJeremy HoldenBusiness MemberReal Estate Agent · Scottsdale, AZ · Member since 2021 · 155 posts · 90 votes
Easy street capital
- 2yStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 505 votes
Hi Jimmy, there are DSCR lenders that will take the AirDNA profile and take a 20% expense factor if the occupancy rate is high enough.
Some more info on DSCR loans in case helpful:
DSCR loans won't use your income to underwrite the loan.
DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.
Here's a bit more in detail about how rates are calculated for DSCR loans:
1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.
pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then next credit category is 740-759 and so on.
2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.
3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.
4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.
I've included an example below to help illustrate this.
So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.
See example below:
DSCR < 1
Principal + Interest = $1,700
Taxes = $350, Insurance = $100, Association Dues = $50
Total PITIA = $2200
Rent = $2000
DSCR = Rent/PITIA = 2000/2200 = 0.91
Since the DSCR is 0.91, we know the expenses are greater than the income of the property.
DSCR >1
Principal + Interest = $1,500
Taxes = $250, Insurance = $100, Association Dues = $25
Total PITIA = $1875 Rent = $2300
DSCR = Rent/PITIA = 2300/1875 = 1.23
DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.
Bright Skyline518 Reviews - 12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes2y
What is the scenario looking like ?
- New to Real Estate · Austin, TX · Member since 2023 · 51 posts · 21 votes2y
Quote from @Stacy Raskin:
Hi Jimmy, there are DSCR lenders that will take the AirDNA profile and take a 20% expense factor if the occupancy rate is high enough.
Some more info on DSCR loans in case helpful:
DSCR loans won't use your income to underwrite the loan.
DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.
Here's a bit more in detail about how rates are calculated for DSCR loans:
1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.
pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then next credit category is 740-759 and so on.
2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.
3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.
4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.
I've included an example below to help illustrate this.
So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.
See example below:
DSCR < 1
Principal + Interest = $1,700
Taxes = $350, Insurance = $100, Association Dues = $50
Total PITIA = $2200
Rent = $2000
DSCR = Rent/PITIA = 2000/2200 = 0.91
Since the DSCR is 0.91, we know the expenses are greater than the income of the property.
DSCR >1
Principal + Interest = $1,500
Taxes = $250, Insurance = $100, Association Dues = $25
Total PITIA = $1875 Rent = $2300
DSCR = Rent/PITIA = 2300/1875 = 1.23
DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new dealsI found this super helpful as a new investor. Thank you
- 2yStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 505 votesHi Jake, I'm happy to hear that. Thanks for letting me know.
Quote from @Jake Burkons:
Quote from @Stacy Raskin:
Hi Jimmy, there are DSCR lenders that will take the AirDNA profile and take a 20% expense factor if the occupancy rate is high enough.
Some more info on DSCR loans in case helpful:
DSCR loans won't use your income to underwrite the loan.
DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.
Here's a bit more in detail about how rates are calculated for DSCR loans:
1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.
pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then next credit category is 740-759 and so on.
2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.
3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.
4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.
I've included an example below to help illustrate this.
So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.
See example below:
DSCR < 1
Principal + Interest = $1,700
Taxes = $350, Insurance = $100, Association Dues = $50
Total PITIA = $2200
Rent = $2000
DSCR = Rent/PITIA = 2000/2200 = 0.91
Since the DSCR is 0.91, we know the expenses are greater than the income of the property.
DSCR >1
Principal + Interest = $1,500
Taxes = $250, Insurance = $100, Association Dues = $25
Total PITIA = $1875 Rent = $2300
DSCR = Rent/PITIA = 2300/1875 = 1.23
DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new dealsI found this super helpful as a new investor. Thank you
Bright Skyline518 Reviews - Lender · Miami · Member since 2022 · 99 posts · 18 votes2y
Hey Jimmy,
As another commenter stated, higher down payments for rental properties are common and help get a better rate. I'd be curious to know what you're looking for in a lender so I can help steer you in the right direction. Some additional info on the property would be great as well. I'll reach out via DM!
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